The gold price fell again below $1,600 today, it is close to €1,200 and at £1,040. It is remarkable how the sentiment has been depressed, or maybe better is being depressed, triggered by the downwards predictions of the large financial institutions. Interestingly, several of those firms are part of the commercials; as we showed earlier this week, the commercials have switched their shorts massively into long positions (read This One Chart Shows Gold Is Bullish). Coincidence, propaganda, or vision? Only time will tell.
In times like these, it is a wise thing not to get caught by emotions but focus on the facts. It helps to listen to the most experienced among us as for instance Jim Sinclair.
Darryl Schoon (www.drschoon.com) pointed today to Jim Sinclair’s remarkable call on October 21, 2012, when he warned that the bullion banks were going to push gold prices lower. Because central banks had become net accumulators of gold, Sinclair said to make money in the new environment the bullion banks—Goldman Sachs, JPMorgan, Deutsche Bank, HSBC—were going to change their strategy regarding precious metals.
According to ArabianMoney.net, Sinclair predicted the banks’ new strategy would involve a change in ‘spread management’:
Spread management is rather technical for non-industry specialists. This is the profit per ounce when gold is sold, and the bullion banks juice this profit by taking both long and short positions in the marketplace to improve their real profit…What Mr. Sinclair foretells is an upcoming move by the bullion banks to dump their short positions and go fully long…
Again, note that the same bullion banks are the ones screaming that the gold bull market is over with a lot of fancy charts, but at the same time they have accumulated long positions and unwinded their shorts to the speculators.
Jim Sinclair today wrote to this subscribers the following:
I have felt that the gold market’s longest period of reaction possible would end on my birthday, March 27th. That puts it directly in place of this wager in time. Regardless of whether or not Sequester occurs, I stand by this timing assumption that I have held since this decline started. Many who I know and asked me in private know this statement to be true. I know that this is read by just those that are at the heart of this decline.
The earliest date of the end of the decline is the 28th of February and the longest period of pressure is until the 27th of March. Thereafter gold is released to the upside which will be a minimum of $3500.
Defend yourselves because today was a wager on the Sequester occurring. Regardless, do not give away your position in either gold or shares that are fully paid for. Margin is madness in gold because the volatility is only starting.
Now is the time to buy, not to sell your physical holdings. Don’t let your emotions reign. As Bob Moriarty noted this week on Gold Silver Worlds: “People who invested between November 1979 and January 1980 were really caught in a big trap.” Likewise people selling their precious metals holdings (apart from traders) are very likely caught in a bear trap.
Gold Silver Worlds | February 28, 2013